Fake Reviews Cost Real $: Legacy Learning Systems

UPDATE 11/14/12: According to commenter bob, this issue has been settled and was the result of some wayward affiliates of Legacy, not Legacy itself.

Another company gets busted by the feds to the tune of $250,000 for using fake reviews to generate business:

The Learn and Master Guitar program promoted by Legacy Learning and Smith is sold as a way to learn the guitar at home using DVDs and written materials. According to the FTC’s complaint, Legacy Learning advertised using an online affiliate program, through which it recruited “Review Ad” affiliates to promote its courses through endorsements in articles, blog posts, and other online editorial material, with the endorsements appearing close to hyperlinks to Legacy’s website. Affiliates received in exchange for substantial commissions on the sale of each product resulting from referrals. According to the FTC, such endorsements generated more than $5 million in sales of Legacy’s courses.

As fake reviews and pay per post type services have proliferated the government have come to see these tactics as the online equivalent of misleading advertising:

The FTC’s revised guidelines on endorsements and testimonials, issued in 2009, explain in general terms when the agency may find endorsements or testimonials unfair or deceptive. Under the guidelines, a positive review by a person connected to the seller – or someone who receives cash or in-kind payment to review a product or service – should disclose the material connection between the reviewer and the seller of the product or service.

As you may recall, two years ago Lifestyle Lift got busted for posting fake reviews about their amazing procedure for ridding people of Turkey Necks and was forced to pay a $300,000 fine.